diff --git a/chunk-key-encodings/fanout/README.md b/chunk-key-encodings/fanout/README.md
new file mode 100644
index 0000000..4657cf7
--- /dev/null
+++ b/chunk-key-encodings/fanout/README.md
@@ -0,0 +1,63 @@
+# Fanout chunk key encoding
+Defines a chunk key encoding that converts chunk coordinates into a `/`-separated path (representing a sequence of nodes in a tree hierarchy), by splitting each coordinate into multiple nodes such that no node in the hierarchy exceeds a predefined maximum number of children. This is useful for filesystems or other hierarchical stores that experience performance issues when nodes (e.g., directories) contain many entries.
+
+## Chunk key encoding name
+
+The value of the `name` member in the chunk key encoding object MUST be `fanout`.
+
+## Configuration parameters
+
+### `max_children`
+
+An integer greater than or equal to 3 indicating the maximum number of child entries (fanout) allowed within a single node. Defaults to 1001 if omitted.
+
+## Example
+
+For example, the array metadata below specifies that chunk keys are encoded using the `fanout` strategy with a maximum of 1001 files per directory:
+
+```json
+{
+    "chunk_key_encoding": {
+        "name": "fanout",
+        "configuration": {
+            "max_children": 1001
+        }
+    }
+}
+```
+
+## Algorithm
+Given chunk coordinates as a tuple of integers and a parameter `max_children`, the chunk key is constructed as follows:
+
+1. For each coordinate `coord` at dimension index `dim` (indexing starts from `0`):
+   1. Create a dimension marker `d{dim}`.
+   2. Express `coord` in base `max_children - 1`, producing a sequence of digits (most significant first).
+   3. Join the digits with `/` and prepend the dimension marker to form a subpath. This creates a subpath of the form:
+    ```
+    d{dim}/{digit0}/{digit1}/.../{digitN}
+    ```
+
+2. Concatenate all dimension subpaths (in order from the lowest to highest dimension) using `/` as a separator.
+
+3. Append `"/c"` at the end to indicate the chunk file itself.
+
+> **Note:** Because nodes may also contain reserved entries such as the dimensional markers `dN` and the final chunk marker `c`, the effective numeric base used to subdivide coordinates is `max_children - 1`.
+
+> **Note:** This method ensures that no directory contains more than `max_children` child entries. Existing chunks never need to be moved or reorganized to maintain this property when new chunks are added.
+
+### Example
+With `max_children = 101` (effective base = 100):
+
+| Coordinates        | Chunk key                    |
+| ------------------ | ---------------------------- |
+| `()`               | `c`                          |
+| `(123,)`           | `d0/1/23/c`                  |
+| `(1234, 5, 67890)` | `d0/12/34/d1/5/d2/6/78/90/c` |
+
+## Change log
+
+No changes yet.
+
+## Current maintainers
+
+* Remco Leijenaar (GitHub: [RFLeijenaar](https://github.com/RFLeijenaar))
\ No newline at end of file
diff --git a/chunk-key-encodings/fanout/schema.json b/chunk-key-encodings/fanout/schema.json
new file mode 100644
index 0000000..68b02d5
--- /dev/null
+++ b/chunk-key-encodings/fanout/schema.json
@@ -0,0 +1,23 @@
+{
+  "$schema": "https://json-schema.org/draft/2020-12/schema",
+  "type": "object",
+  "properties": {
+    "name": {
+      "type": "string",
+      "const": "fanout"
+    },
+    "configuration": {
+      "type": "object",
+      "properties": {
+        "max_children": {
+          "type": "integer",
+          "minimum": 3,
+          "default": 1001
+        }
+      },
+      "additionalProperties": false
+    }
+  },
+  "required": ["name"],
+  "additionalProperties": false
+}